Louisiana Draws Major Investments From Across The Globe

Downriver from Baton Rouge, Methanex Corp. of Canada is assembling not one, but two massive methanol plants made of components disassembled and shipped from Chile.

Upriver from New Orleans, Yuhuang Chemical Co. Ltd. of China is breaking ground on the first of two major methanol plants, with a third derivatives plant to follow.

Together, the projects will produce more than 4,600 construction jobs and over 3,500 permanent direct and indirect jobs in Louisiana. And together they will make more methanol than the entire U.S. did a generation ago, before production of the chemical commodity moved offshore.

Why two companies, headquartered continents apart, would fix their most significant capital investments — a combined $3 billion — mere miles apart on opposite banks of the Mississippi River is the stuff of Louisiana’s industrial and increasingly international renaissance.

Methanol is but one wave of an international investment tide building in Louisiana.

“We have the infrastructure for international trade, but also the business climate to support it,” said Greg Rusovich, chairman of the Louisiana Board of International Commerce. “There is no reason we can’t grow into another Singapore or Dubai.”

Why Louisiana?

Like many other international investors, Yuhuang Chemical recognized the unbeatable combination of Louisiana’s major pipeline, port, rail and highway corridors; the state’s access to ample, affordable supplies of natural gas; and the state’s ascendancy in business climate rankings as a location with low operating costs and significant workforce and infrastructure advantages.

“Louisiana’s strategic advantages are many,” Yuhuang Chemical CEO Charlie Yao said. “While the company has long been highly regarded in China as one of its primary contributors to the industry in Asia, this Louisiana operation represents the company’s commitment to significance on the world petrochemical platform.”

Today, Louisiana ranks No. 1 in export performance among U.S. states, according to the U.S. Chamber of Commerce. It imports more iron and steel than any other state, U.S. Department of Commerce data show. And on a per capita basis, Louisiana ranks No. 1 in the U.S. for attraction of FDI, or foreign direct investment, since 2008.

Louisiana’s FDI during that period exceeds $30 billion, and that investment relies heavily on the vital Mississippi River, a gateway to the Gulf of Mexico and global ports that also provides import access to 38 interior U.S. states.

Yet FDI is reaching other parts of Louisiana in record numbers, too. In Northwest Louisiana, European firm Benteler Steel/Tube is completing the company’s first major U.S. manufacturing center, a massive 1.4 million-square-foot complex that will produce seamless steel tubing for oil and gas exploration and production throughout North America. With a capital investment of nearly $1 billion, Benteler will create 675 new direct jobs at The Port of Caddo-Bossier in Shreveport.

In Southwest Louisiana, global energy firm Sasol Ltd. operates existing chemical manufacturing and research and development centers with 435 employees. In March 2015, the South African company broke ground on an $8.1 billion ethane cracker complex that will feature six new chemical plants and 500 new direct jobs, result in an estimated 2,395 new indirect jobs, and generate 5,000 construction jobs.

Foreign direct investment begets more FDI projects: for example, the Sasol project already has leveraged additional capital investment of more than $120 million, along with 350 construction jobs, from Matheson Tri-Gas Inc. to relocate its industrial gases facility in Lake Charles. Owned by Japan-based Taiyo Nippon Sanso, Matheson Tri-Gas will install cryogenic technology supplied by its parent company at the new site near Sasol.

In April 2015, Japan-based Shin-Etsu announced a $1.4 billion project through its North American subsidiary, Shintech Inc., to create new ethylene production at Shintech’s Iberville Parish facilities southwest of Baton Rouge. As the world’s largest PVC plastics manufacturer, Shintech will be building the first ethylene plant by a Japanese chemical company in the U.S. and will increase its total capital investment in Louisiana over the past 15 years to $4.7 billion.

In Louisiana, international companies find significant workforce advantages. Tapping a highly skilled energy, manufacturing and technology workforce, international firms can gain access to LED FastStart®, the nation’s No. 1 state workforce development program. FastStart delivers a highly customized and comprehensive recruitment, training and orientation game plan at no cost to eligible manufacturing and service companies, enabling them to have extremely well-prepared employees from day one of a new operation.

Logistically, Louisiana lies at the heart of what matters most to international investors.

The state is home to one of the largest port complexes in the world, with five deepwater port districts on the Mississippi River and the largest single port by tonnage in the Western Hemisphere (Port of South Louisiana). Louisiana ranks No. 2 in total port throughput in the U.S., with six total deepwater ports handling 28 percent of U.S. bulk cargo.

Rails and roadways are other critical assets. Louisiana is one of just two states where all six Class I railroads converge in the U.S., and six major interstate highways cross the state. The state’s air assets — an international passenger airport in New Orleans, an international aircraft maintenance and repair center in Lake Charles, and seven commercial airports — recently gained new reach when Copa Airlines began direct flights from New Orleans to Panama City, Panama.

Bottom-line benefits for international firms include Louisiana’s low operating costs and favorable business climate. Louisiana now ranks in the Top 10 of five national studies of state-level business climates in the U.S.

Key Collaborations

Although large industrial projects account for a healthy share of capital investment made by offshore firms, Louisiana’s international commerce sector includes software and technology operations, financial services, and flexible domestic suppliers who target global customers.

Baton Rouge-based Orion Instruments does business in Russia, Brazil, Nigeria, Oman and nearly 30 other nations where customers order Orion’s magnetic-level indicators for industrial processes. Its employees include engineers and sales managers fluent in Cantonese, Mandarin, Vietnamese and German. Roughly 65 percent of its sales are outside the U.S.

“We’re all over the world,” said Eric Moore, Orion’s technical sales and marketing manager. Although the firm is domestic, Orion’s success conveys a message state officials want investors around the world to understand: Firms across an array of industries can reach global markets and tap unmatched competitive advantages when they choose Louisiana for their projects.

From a position of strength, Louisiana is implementing a master plan for international commerce that prioritizes the state’s trade assets and targets opportunities for job creation in three areas: FDI, bulk cargo and reshoring of international operations.

Aggressive promotion of Louisiana’s investment climate and trade growth support could lead to the creation of as many as 75,000 jobs in the state through 2018, according to industry estimates prepared for Louisiana Economic Development.

New trade outreach efforts in China, India and other fast-growing economies center on Louisiana advantages that include flexible incentives and workforce assets, such as collaborations between Louisiana universities and private-sector partners.

CGI of Canada — among the five largest independent IT firms in the world — chose Lafayette in April 2014 for a 400-job innovation center at the 143-acre University of Louisiana at Lafayette (UL Lafayette) Research Park. A cornerstone of the project is a 10-year, $4.5 million higher education initiative funded by the State of Louisiana and led by UL Lafayette, which will triple the number of undergraduate degrees awarded annually by the university’s School of Computing and Informatics.

The partnership with UL Lafayette is “a groundbreaking model for CGI that can be applied globally while tapping the talent and resources of Louisiana,” said CGI executive Dr. James Peake.

For the Benteler project in Shreveport and the Sasol project in Lake Charles, the state funded advanced manufacturing training centers (approximately $20 million each) to prepare a next-generation workforce for those major international investments, while also meeting ongoing training needs for other manufacturers in the regions.

Key collaborations are an important part of the mission of the Louisiana Board of International Commerce, led by Rusovich and including port and airport officials, business leaders, regional economic development representatives and public agency chiefs. Recently, Rusovich joined a Louisiana delegation to Europe that landed new international investment in Louisiana’s renowned tourism sector.

Viking River Cruises cited Louisiana’s “rich history, culture and cuisine” in choosing New Orleans for its first North American river cruises. Viking, which will build six $100 million vessels for multiday trips along the Mississippi River, will operate from a U.S. homeport at the city’s historic French Quarter.

For Rusovich, an early 2015 meeting in Basel, Switzerland, marked a decisive moment in Louisiana’s changing international commerce outlook.

For decades, on behalf of his business, he had met face-to-face with clients around the world to explain the state’s trade advantages. That day in Switzerland, he watched Louisiana Gov. Bobby Jindal deliver the same message to Viking’s chief executive officer.

Said Rusovich, “To watch him seal the deal, for me, was to watch the moment the state really understood that it can succeed on a global stage.”

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